California Passes Nation’s Most Comprehensive Mental Health Parity Law
Today, Gov. Gavin Newsom signed SB855 into law, ushering in an era of accountability for commercial health insurers in California and setting the stage for national reform in mental health parity. Psych-Appeal is honored to have played a role in the shaping of this legislation, with founder Meiram Bendat providing counsel in drafting the bill and testifying in support of it at the California legislature.
The new law in California includes several distinct features that advance parity for mental health and substance use treatment. First, the law expands parity protections to all conditions described in the Diagnostic and Statistical Manual of Mental Disorders (DSM), rather than to just nine previously identified mental health disorders.
Second, by establishing a statewide definition of “medical necessity” for coverage of mental health and substance disorder treatment, the law requires insurers to make benefit determinations that are consistent with “generally accepted standards of care,” and codifies the generally accepted standards of care articulated in the landmark Wit v. UBH decision. Notably, with respect to mental health and substance use disorders, the law requires insurers to exclusively apply medical necessity criteria developed by nonprofit clinical specialty associations (such as AACP and ASAM), to receive trainings from nonprofit clinical specialty associations in the application of such criteria, and to achieve inter-rater reliability scores of at least 90% when applying these criteria. The law expressly forbids insurers from limiting benefits or coverage for mental health and substance use disorders to short-term or acute treatment.
Additionally, the law requires insurers to cover out-of-network treatment so that patients are not subject to anything beyond in-network cost-sharing if medically necessary mental health or substance use services are not available in-network within geographical and timeliness standards set by law or regulation. The practical effect is that insurers will be incentivized to expand their network capacity by recruiting suitable providers based on competitive market (rather than artificially devalued) reimbursement rates.
Finally, the law prohibits discretionary clauses in insurance contracts that give rise to a deferential standard of judicial review. This provision will require courts to review legal claims against health insurers de novo and will serve as another deterrent against insurer misconduct.
We look forward to full implementation of this law by January 1, 2021.